FN
Fabrinet
$478.39
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 53.5% above fair value
You pay
$478.39
Bear
$208.13
Fair
$311.60
Bull
$429.80
Bear
$208.13
-56.5%
10% stage 1 growth, 11% discount
Fair
$311.60
-34.9%
16% stage 1 growth, 11% discount
Bull
$429.80
-10.2%
21% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (16% base case)
Terminal Value % of EV
44%
Implied Market Multiple
89.2x
Market is pricing in (growth)
28.9%
vs 16.0% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $653.00 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $311.60 per share.
Warnings
Wall Street's average price target is $653.00 (from 24 analysts). Our estimate is 70% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions